MANUFACTURING A GOOD YEAR

08-01-2018

by

Laurence Marchini

in

Business & Finance

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It was supposed to have been the year when Australian manufacturing industry would dig in and somehow or other recover from the setbacks of the closures at Toyota and Holden. But 2017 turned out to be a year of expansion, according to the final figures from the Ai Group’s Australian Performance of Manufacturing Index, which stayed in positive territory all year, concluding with a robust figure of 56.2 in December.

In announcing the figures, AiGroup Chief Executive Innes Willox said: “The healthy Australian PMI reading of 56.2 is all the more impressive given the headwinds of the closure of auto assembly, high energy prices and growing skills shortages which have marked 2017.”

However, he cautioned: “Manufacturers will be looking to the new year for the progress on the National Energy Guarantee and other measures to put downward pressure on business costs.”

December 2017 was the 15th consecutive month of expansion or stability for the Australian PMI, marking the longest run of expansion since 2005. And the expansion was almost uniform across all industry subsectors, with only the “wood and paper” and the “textiles, clothing, furniture and other” subsectors registering contraction.

Highlights by activity included the production subindex, which rose by 1.1 points to 57.7 points in December and the new orders subindex, which remained positive at 56.9. Capacity utilisation also hit an eight-year high at 79.7%.

And while energy costs remain an issue, the input prices subindex actually fell to 70.8 in December, dropping back from its six-year high of 76.4 points in November 2017. This combined with a small fall in the wages subindex and a slight rise in the selling prices subindex to create more favourable business conditions across the board.

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